private finance initiative

An idea suggested by the UK Labour Party when in opposition before 1997, and particularly by the deputy leader, John Prescott, who argued that the country's infrastructure (services) could be improved by combining public expenditure with private finance. Since assuming office in May 1997 the Labour government has kept the initiative alive by gaining the support of major companies for its investment plans and inviting industrialists to work in or with the administration.

In PFI deals, the public sector decides what service is required and the private sector is challenged to bid for the design, building, financing, and operation of the service. The government aims to have agreed £14 billion of PFI deals by the end of 1998–99. A recent example of PFI has been a £150 million deal to build and operate a new national insurance records system for the Department of Social Security.